The tool will enable asset managers to
compete with HFT firms to supply liquidity by using similar techniques seen in
their proprietary algorithms.

Jeff Bacidore, head of algorithmic trading
at ITG, said: “High-frequency traders are already big providers of liquidity to
markets and our more sophisticated clients wanted to be able to do the same
thing.”

HFT has stepped into the gap left by investment
banks which have largely withdrawn from proprietary trading and market making
due to pressures on balance sheets and the impact of regulation, such as the
Volcker Rule in the US, that limits their ability to trade on their own
accounts.

Another agency broker, Instinet, made a
similar move in early February with its MAKE algorithm, designed to enable the
buy-side to act like a market maker while also avoiding predatory flow.

Speaking to theTRADEnews.com, Instinet
Europe’s head of electronic trading, Ben Springett, said: “The buy-side are
facing a number of challenges as a result of limited liquidity. MAKE would help
firms provide liquidity to the market and draw other flow towards them.”

“The buy-side knows that it can be challenging
to find natural liquidity and often they have to pay a premium for that. SLimit
will let them take a large order and work it passively to take advantage of
that liquidity while keeping track of what is happening in real-time,” he said.